Local Solutions

Local Solutions Presented by: David McMahon, MBA, AAI Senior Commercial Lines Executive Atlas Insurance

Prepared for: Adapting To A Changing Climate. Š Atlas Insurance 2019

Atlas Insurance

• Established 65 years ago!

• Serve various niche industries, including Community Associations • Insure over 400 communities in Southwest Florida • Well-versed in property & property markets

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History - Starts with Hurricane Andrew

• Hurricane Andrew • Storm was a “complete upheaval of society in just a few hours” • Led to a reconfiguration of the tools now used to study, forecast, prepare for and respond to hurricanes (and the beginning of “Florida Building Codes”)

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History - Repetitive Chaos

• Hurricanes Charley, Frances, Ivan & Jeanne - 2004 • Hurricanes Katrina, Rita & Wilma – 2005 • After 2004-2005 hurricane seasons, insurance companies left the state or collapsed; or both.

• Warren Buffett pledges $4B in bonds for $224 million in 2007

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History – Building Mitigation

• After 2004 & 2005, spike in insurance rates led to panic • The beginning of Mitigation Reports • Granular level underwriting to give credit where credit is due • Building codes toughen their stance against the forces of nature • Contractor industry responds with a “full court press”

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How About Flood? 2017 and 2018 Hurricane Seasons

• Harvey drops a record 60 inches of rain in a week • Irma pushes water out of Tampa Bay; conversely, St Johns River in Jacksonville FL reaches its highest level ever • Florence floods the Carolinas • Michael decimates parts of the Florida Panhandle/southern US • 14-foot flood surge (tropical storms/hurricanes pushing water levels above the high tide line)

• Wind, Surge & Flood damage making separate and/or collective impacts on coastal property 6

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Florida & Sea Level Rise – Billions to Trillions?

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Florida & Sea Level Rise

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Disasters Not Just a “Coastal” Issue

• Drought • Hail • Ice Storms • Mudslides • Tornadoes • Lightning • Wildfire • Winter storms • Recently being named!!

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Uncertainty Impacting Insurance

• Insurance models have been redefined • Catastrophic insurers can’t simply rely on past experience/history • Complicates catastrophe finance and recovery planning • Profitability versus solvency • Flying with one eye open!

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Industry Feverishly Looking for Answers

• Analytic Companies that sell their models to insurance companies are taking the lead to calculate the impact • Big insurers are expanding in-house teams of climatologist, computer scientists and statisticians to redesign models to incorporate the impact of the warming earth on hailstorms, hurricanes, flooding and wildfires • In some case, models show areas that haven’t been impacted by past storms • Hurricanes entering the Persian Gulf for example • Remember, we can only accept risk and put risk on the books if they 11

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What Can We Do?

• Improve loss data collection • Engage in climate research that impacts future modeling • Continue to promote loss prevention • Mitigation program, for example • Engage in other industry-driven activities related to climate change

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Last One Standing….

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David McMahon, MBA, AAI T: 941-552-5042 E: dmcmahon@atalsinsuranceagency.com